Homebuyers and sellers in the U.S. will probably experience the effects of the tariffs imposed by President Donald Trump on all countries around the world on Wednesday; however, it’s not entirely negative.
Experts predict that tariffs will raise the expenses associated with constructing and renovating houses due to higher costs for imported construction materials. Concurrently, as consumer prices rise and economic expansion decelerates, mortgage interest rates might drop—potentially benefiting certain prospective homeowners.
The 30-year fixed-rate mortgage usually follows the performance of the 10-year Treasury note. During times when financial markets perceive turmoil, investors often seek refuge in the 10-year note due to its status as an instrument issued by the U.S. government and perceived low-risk nature. If the 10-year yield decreases, this tends to cause a parallel decline in the 30-year mortgage rate.
When the 10-year yield decreased further in September, the 30-year mortgage rate also fell, leading to an increase in mortgage refinancing activities.
From the archives (as of September 2024): The surge in refinancing has jumped 175% compared to last year, with mortgage rates staying at their lowest point in two years.
Following Trump’s announcement of his "mutual" tariffs By 10 a.m. Eastern Time on Thursday, the yield on the 10-year Treasury had dropped to its lowest point since October.
On Thursday, the average for a 30-year mortgage rate was recorded as 6.64%, based on data analyzed by Freddie Mac, which evaluates mortgage applications to calculate this statistic. This marks a slight decrease from last week’s rate of 6.65% and also falls below the 6.82% reported one year prior.
A routine daily poll of mortgage rates Mortgage News Daily On Thursday afternoon, a significant decrease of 12 basis points was reported for the 30-year fixed-rate mortgage, bringing it down to 6.63%, which marks the lowest point for this year in 2025.
What can we expect from mortgage rates over the next few weeks and months?
“If President Trump keeps these tariffs in place rather than using them as a short-term bargaining tool, bond yields could see continued downward pressure, bringing mortgage rates down with them,” Dan Richards, president of mortgage lender Flyhomes Mortgage, told . “That would be a positive for housing, especially during a spring buying season already showing the highest purchase-application data in years.”
Meanwhile, the real estate sector might experience various adverse effects from the tariffs, including increasing property values and a blow to overall economic expansion.
Kathy Bostjancic, who leads economics at Nationwide, mentioned that the tariffs unveiled on Wednesday were bigger and more intricate than her expectations.
The Trump administration imposed a base tariff of at least 10% on imports from every nation and declared extra duties on products coming from nations flagged by the White House as "the worst violators."
An analysis Redfin highlighted that mortgage rates might experience fluctuations in the upcoming period due to various opposing factors shaping their direction.
On one side, reduced economic expansion, increased chances of recessions, and a downturn in the equity markets could lead to a bond boom, which might result in lower mortgage rates," Redfin noted. "Conversely, persistent elevated inflation along with the potential for the Federal Reserve to maintain high interest rates could drive up mortgage rates.
"Whether interest rates go down or up hinges on whether this surge in inflation turns out to be short-lived," the brokerage further noted.
Redfin anticipates increased construction expenses for newly built houses; however, the extent of this rise hinges on various elements currently undergoing changes.
Bostjancic estimated the effect of the tariffs and believes that economic growth, as indicated by real GDP growth, might continue at a similar rate to last year or could potentially stall entirely this year.
She noted though that there’s a potential for it to become negative. "Substantial counteractions from our trade counterparts might push GDP growth into negative territory and lead to a recession," Bostjancic stated.
See also: Potential home purchasers are wishing for an economic downturn to lower house prices. Is this logical?
Danielle Hale, who leads as the chief economist at Realtor.com—a platform for real estate—mentioned that reduced economic expansion might lead to homebuyers losing their buying strength.
Hale pointed out that although reduced mortgage rates could be advantageous for homebuyers and possibly facilitate more homeownership, sluggish economic expansion might lead to restrained income growth. This means that purchasers might lack sufficient earnings to buy houses if the economy weakens; thus, cheaper mortgage rates may not substantially assist economically strained homebuyers.
"Tariffs may lead to an improvement in one of the three main aspects of housing affordability — mortgage rates — but they could also potentially negatively affect the other two factors — home prices and wage increases," Hale stated.
Home constructors anticipate that tariffs will raise the price of newly built homes. They are currently observing suppliers increasing their prices for construction materials like timber, plasterboard, and household appliances, most of which come from imports.
In a survey conducted among builders in March, the National Association of Home Builders found estimated Tariffs would raise the expense of constructing a new house by $9,200.
For those looking to buy a new home, the extent to which costs rise hinges on how many additional expenses developers choose to pass along," explained Chen Zhao, who leads economic research at Redfin. "However, it's quite probable that the price of new homes will see significant increases.
Regarding the direction of mortgage rates over the next few months, experts have differing views on whether this will be advantageous for homebuyers.
The positive aspect for the housing market is that mortgage rates are also dropping significantly," stated Melissa Cohn, Regional Vice President at William Raveis Mortgage. "However, the downside is that substantial wealth is currently being depleted in the stock markets, making individuals hesitant to sell their assets at this time.
Richards from Flyhomes opted to stay optimistic regarding the effect of decreased interest rates.
It remains uncertain how these tariffs will affect employment," he stated. However, "the developments initiated on Wednesday overall benefit the real estate sector," Richards noted additionally. "Should this pattern continue, 2025 might mark the first time since 2021 that the housing market significantly surpasses projections.